The Table Below Shows Data for Five Economies of Similar

question 141

Multiple Choice

The table below shows data for five economies of similar size.Real GDP is measured in billions of dollars.Assume that potential output for each economy is $340 billion. TABLE 24-1 Refer to Table 24-1.How is the adjustment asymmetry demonstrated when comparing Economy A to Economy E?

• A)The size of the output gap is the same in Economies A and E,but wages are rising in A and falling in E.
• B)The output gap is larger in Economy A,yet wages are changing more slowly.
• C)The output gap is much larger in Economy E,so wages are changing at a faster rate.
• D)The size of the output gap is the same in Economies A and E but wages are falling more slowly in A than they are rising in E.
• E)There is insufficient data with which to observe the adjustment asymmetry.

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Definitions:

Marginal Revenue

This is the increase in revenue that results from the sale of an additional unit of a product.

Marginal Cost

The change in total production cost that arises when the quantity produced is incremented by one unit.

Demand Curve

A diagram demonstrating how the price of an item correlates with the volume that consumers are ready to acquire at assorted prices.

Marginal Revenue Curve

A visual depiction illustrating the changes in marginal revenue as the level of produced output fluctuates.